HMWK #CB-1 Continued - Questions 13 thru 16
13. A series of equal cash flows at fixed intervals is termed
a(n):
A. present value index
B. price-level index
C. net cash flow
D. annuity
14. Dukes Company is considering the acquisition of a machine
that costs $375,000. The machine is expected to have a
useful life of 6 years, a negligible residual value, an
annual cash flow of $150,000, and annual operating income of
$87,500. What is the estimated cash payback period for the
machine?
A. 3 years
B. 4.3 years
C. 2.5 years
D. 5 years
15. Hotaling Corporation is analyzing a capital expenditure that
will involve a cash outlay of $146,040. Estimated cash flows
are expected to be $30,000 annually for seven years. The
present value factors for an annuity of $1 for 7 years at
interest of 6%, 8%, 10%, and 12% are 5.582, 5.206, 4.868, and
4.564, respectively. The internal rate of return for this
investment is:
A. 10%
B. 6%
C. 12%
D. 8%
16. All of the following qualitative considerations may impact
upon capital investments analysis except:
A. manufacturing productivity
B. manufacturing sunk cost
C. manufacturing flexibility
D. manufacturing control